Artelligence for September 6, 2018

What Mary Boone Did Wrong: The news released by the US Attorney for the Southern District of New York that gallerist Mary Boone had pleaded guilty to filing false tax returns highlights an issue rarely discussed, the use of business funds for personal matters. Boone reduced the 2011 taxable profits of her gallery from $3.7m to a loss by falsifying personal payments as business transactions. Here’s how the SDNY described it:

“In 2012, BOONE caused her accountant to file false and fraudulent 2011 federal income tax returns for the Gallery and for BOONE individually. BOONE caused the Gallery’s 2011 partnership return, Form 1065, to report a false business loss of approximately $52,521, whereas, in reality, the Gallery made a profit of approximately $3.7 million in 2011. BOONE perpetrated this tax fraud in part by using business funds to pay for over $1.6 million in personal expenses and then falsely claiming these personal expenses as business deductions. For example, in 2011, BOONE issued approximately $800,000 in business checks to pay for the remodeling of BOONE’s Manhattan apartment, as well as approximately $120,000 more in business checks to pay for rent and other expenses for a second Manhattan apartment where BOONE lived while the remodeling was underway. In order to conceal the personal nature of these and other expenses, and thereby evade income taxes, BOONE falsely characterized approximately $1.6 million in personal expenses as tax deductible business expenses in handwritten check registers that BOONE provided to her accountant. For example, BOONE falsely characterized a $500,000 payment to a contractor for remodeling BOONE’s apartment as ‘commission.’ “

That Big Art Fair Company Isn’t Doing Much Better Than Small or Mid-Sized Galleries:The trade publication Exhibition World reports that Art Basel’s parent company, MCH, has reported financials for the first half of 2018. Even though Art Basel has become the locus of the battle for survival among small and mid-sized galleries, in the minds of many art world observers, it turns out MCH is facing its own troubles. Operating income was up nearly 17% so far in 2018; unfortunately, expenses rose more at a rate of 20%. Thus, MCH has seen a fall in profits.

In a statement on their website, MCH said it is “undergoing a process of transformation in which [we have] to align [ourselves] to the major changes taking place in the classical exhibition and event business.” …

Peres says his insatiable appetite for African ethnographic art was sparked by the 1984 landmark exhibition Primitivism in 20th-Century Art at the Museum of Modern Art in New York. However, it wasn’t until around 2000 that he began collecting in earnest. Since then, the Cuban-born dealer has amassed 150 or so prime African pieces, which he rotates within the gallery like space that he and his husband Benoît Wolfrom bought and renovated in 2014, stripping it down to its bare essentials. …

The Cosmetic Changes in Art Fair Pricing Continue with Frieze:The Art Newspaper reports Frieze’s new schedule for booth pricing that will begin with the Los Angeles fair. It is not clear from this announcement or the notice Art Basel gave recently about similar changes whether the new pricing solves any pre-existing problem beyond the perception problem that art fair costs are what’s limiting the success of small and mid-sized galleries. …

“By now it is no secret that small and midsize galleries are facing unprecedented financial pressures. As larger galleries gobble up market share, it becomes harder for these dealers to stay afloat in high-rent cities like New York or to compete on the costly art-fair circuit. Generally operating at lower price points than the behemoths, small galleries require higher volume to meet expenses. At all levels and in every venue, dealers become more risk averse, less willing to take a chance on experimental work that might not sell. Formerly, dealers nurtured emergent talent with the understanding that they would reap the rewards if and when an artist became successful, and the more successful artists in a gallery’s stable helped finance the presentation of less marketable work. The poaching of big-ticket artists by megadealers destroys this creative ecosystem. A winner-take-all environment essentially eliminates anything that cannot immediately be monetized.” …

Australia’s Art Market Has a Good Year: The Australian Financial Review looks over the results from Sotheby’s, Deutscher and Menzies, the three top Australian auctioneers. Driven mostly by the appetite and interest in native Australian painters, the market down under has taken a number of years to recover after the financial crisis:

On present trends, this year’s art sales tally looks likely to fall well short of last year, when overall sales by all the auctioneers – boosted by several special collections – rose to a total $141 million from 2016’s $106 million. …